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8-K - FORM 8-K - Youngevity International, Inc. | ygyi8k_mar302017.htm |
Exhibit
99.1
Youngevity
International, Inc. Reports
Record Revenues for
the Year Ended December 31, 2016
Revenues Increased 3.9% Year-Over-Year
Gross Profit Increased by 5.6%
Shareholder Conference Call at 4:15 EDT
SAN
DIEGO, CA--(March 30, 2017) - Youngevity International, Inc.
(OTCQX: YGYI), a leading omni-direct
lifestyle company, today reported financial results for the full
year ended December 31, 2016.
2016
Full Year Highlights:
●
Revenues increased
3.9% over the prior year to $162.7 million
●
Gross Profit
increased 5.6% to $98.1 million compared to the prior
year
●
Operating Income
decreased 53.5% to $2.5 million compared to the prior
year
●
Net Loss decreased
to $398,000 compared to net loss of $1.7 million in
2015
●
Adjusted EBITDA
decreased 26.5% to $6.8 million compared to the prior
year
Steve
Wallach, Youngevity CEO said, “Our goal for 2016 was to set
us up for the future and to position Youngevity for scalable growth
across the enterprise. We spent virtually an entire year developing
our Web Platform and our Cloud Based Infrastructure to position
Youngevity as a platform company. We are just now entering the
deployment phase of our Web Portal which should allow us to
accelerate growth domestically and globally as well as more
efficiently integrate future acquisitions. The last half of 2016 we
invested heavily in marketing strategies including several newly
branded product and training videos in multiple languages. We are
anxious to start realizing a return on these substantial
investments in the coming months and years.”
The
President and CFO of Youngevity, Dave Briskie added, “It is
always nice to achieve record revenue but when you factor in the
scope and number of the projects and initiatives that were launched
in 2016, we are especially proud of the revenue numbers. In
addition to the Web Portal, we completely overhauled (or
restructured) the entire sales and marketing team, invested heavily
in the rebranding of Youngevity, including the beginning of a
repackaging overhaul designed to create a cohesive look among all
the brands, and we invested heavily in compliance initiatives, as
well as initiatives to eliminate low margin components of our
coffee segment. We are quite confident that these initiatives were
essential for our future growth and profitability particularly as
we work towards effecting a proposed uplisting this year of our
common stock on a national securities exchange.”
-1-
2016
Full Year Results
Revenues
For
the year ended December 31, 2016, our revenue increased 3.9% to
$162,667,000 as compared to $156,597,000 for the year ended
December 31, 2015. During the year ended December 31, 2016,
we derived approximately 89% of our revenue from our direct sales
and approximately 11% of our revenue from our commercial coffee
sales. Direct selling segment revenues increased by $6,491,000
or 4.7% to $145,418,000 as compared to the year ended December 31,
2015. This increase was primarily attributed to additional revenues
of $9,602,000 derived from the Company’s new acquisitions,
offset by a decrease of $3,111,000 in revenues from existing
business. For the year ended December 31, 2016, commercial coffee
segment revenues decreased by $421,000 or 2.4% to $17,249,000 as
compared to the year ended December 31, 2015. This decrease was
primarily attributed to a decrease in our roaster business due to a
strategic shift in the segment’s business model to focus more
effort on Company owned brands and forego its lower margin bulk
coffee processing business, partially offset by an increase in
green coffee sales as a result of increases in green coffee
prices.
Cost of Revenues
Overall
cost of revenues increased approximately 1.4% to $64,530,000 as
compared to $63,628,000 for the year ended December 31, 2015. The
direct selling segment cost of revenues increased 6.4% as a result
of cost related to the increase in sales, an increase in product
royalties and labor costs, partially offset by a decrease in
shipping costs. The decrease in cost of revenues in the commercial
coffee segment of 10.8% is attributable to decreases in sales
related to the roaster business and lower green coffee costs a
result of the Company’s ability to procure green coffee at
lower costs from its plantation and other suppliers in
Nicaragua.
Cost
of revenues includes the cost of inventory including green coffee,
shipping and handling costs incurred in connection with shipments
to customers, direct labor and benefits costs, royalties associated
with certain products, transaction merchant fees and depreciation
on certain assets.
Gross Profit
In
2016 gross profit increased approximately 5.6% to $98,137,000 as
compared to $92,969,000 for the year ended December 31, 2015. Gross
profit as a percentage of revenues increased to 60.3%, compared to
59.4% in the prior year.
Operating Expenses
Operating
expenses increased approximately 9.2% to $95,622,000 as compared to
$87,563,000 for the year ended December 31, 2015. Included in
operating expense is distributor compensation paid to our
independent distributors in the direct selling segment. For the
year ended December 31, 2016, distributor compensation increased
6.1% to $67,148,000 from $63,276,000 for the year ended December
31, 2015. This increase was primarily attributable to the increase
in revenues. Distributor compensation as a percentage of direct
selling revenues increased to 46.2% for the year ended December 31,
2016 as compared to 45.5% for the year ended December 31, 2015.
This increase was primarily attributable to added incentive payouts
and higher level achievements by distributors.
Sales
and marketing expense increased 26.8% in 2016 to $10,413,000 from
$8,212,000 for the year ended December 31, 2015 primarily due to
increases in marketing and customer service staff direct labor and
benefits costs, product marketing costs, convention costs and
distributor events costs.
General
and administrative expense increased in 2016 by 12.4% to
$18,061,000 from $16,075,000 for the year ended December 31, 2015
primarily due to increases in costs related to the international
expansion, employee labor and benefits costs, consulting fees,
amortization costs, computer and internet related costs, travel
costs, offset primarily by a decrease in non-cash expense of
$253,000 as compared to last year related to warrant modification
expense recognized during the year ended December 31, 2015. In
addition, the contingent liability revaluation resulted in a
benefit of $1,462,000 for the year ended December 31, 2016 compared
to a benefit of $446,000 for the year ended December 31,
2015.
-2-
Total Other Expense
In
2016, total other expense decreased by $2,625,000 to $3,103,000 as
compared to $5,728,000 for the year ended December 31, 2015. Total
other expense is primarily net interest expense of $4,474,000 and
the change in the fair value of warrant derivative of
$1,371,000.
Net Loss
For
the year ended December 31, 2016, the Company reported a net loss
of $398,000 as compared to a net loss of $1,706,000 for the year
ended December 31, 2015. The primary reason for the decrease in the
loss when compared to the prior year was due to the decrease in
income tax provision from $1,384,000 in tax provision in 2015 to a
tax benefit of $190,000 in 2016, offset by an increase in loss
before income taxes from $322,000 in 2015 to $588,000 in loss
before income taxes in 2016.
Adjusted EBITDA
EBITDA
(earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of stock based
compensation expense and the non-cash loss on extinguishment of
debt and the change in the fair value of the warrant derivative or
"Adjusted EBITDA," decreased 26.5% to $6,772,000 for the year ended
December 31, 2016 compared to $9,215,000 in the same period for the
prior year.
Total
cash and cash equivalents as of December 31, 2016 were $869
thousand, compared to $3.9 million as of December 31,
2015.
Total
assets as of December 31, 2016 were $66.0 million compared to $61.3
million as of December 31, 2015.
Conference Call Information
Youngevity
International will host a conference call today at 4:15 p.m.
Eastern Daylight Time (1:15 Pacific Daylight Time) to discuss its
financial results, quarterly highlights and business
outlook.
Investors
can access the conference call by dialing Toll: +1 (562) 247-8321
and entering the access code: 132-403-283. It is advised that you
dial-in at least five minutes prior to the call.
The
conference call will be recorded and available for replay shortly
after the conclusion of the call in the Investor Relations section
of Youngevity International's website: http://ygyi.com/calls.php. The
webcast will be archived for approximately 60 days.
Non-GAAP
Financial Measure -- Adjusted EBITDA
This
news release includes information on Adjusted EBITDA, which is a
non-GAAP financial measure as defined by SEC Regulation
G.
Management
believes that Adjusted EBITDA, when viewed with our results under
GAAP and the accompanying reconciliations, provides useful
information about our period-over-period growth. Adjusted EBITDA is
presented because management believes it provides additional
information with respect to the performance of our fundamental
business activities and is also frequently used by securities
analysts, investors and other interested parties in the evaluation
of comparable companies. We also rely on Adjusted EBITDA as a
primary measure to review and assess the operating performance of
our company and our management team.
Adjusted
EBITDA is a non-GAAP financial measure. We calculate adjusted
EBITDA by taking net income (loss), and adding back the expenses
related to interest, income taxes, depreciation, amortization,
stock based compensation expense, change in the fair value of the
warrant derivative, non-cash impairment loss and debt
extinguishment gain or loss, as each of those elements are
calculated in accordance with GAAP. Adjusted EBITDA should not
be construed as a substitute for net income (loss) (as determined
in accordance with GAAP) for the purpose of analyzing our operating
performance or financial position, as Adjusted EBITDA is not
defined by GAAP.
-3-
About Youngevity International
Youngevity
International, Inc. (OTCQX: YGYI), is a leading
omni-direct lifestyle company - offering a hybrid of the direct
selling business model, that also offers e-commerce and the power
of social selling. Assembling a virtual Main Street of products and
services under one corporate entity, Youngevity offers proven
products from the six top-selling retail categories:
health/nutrition, home/family, food/beverage (including coffee),
spa/beauty, apparel/jewelry, as well as innovative services. The
Company was formed during the summer 2011 merger of Youngevity
Essential Life Sciences with Javalution® Coffee Company (now
part of the company's food and beverage division). The
resulting company became Youngevity International, Inc. in July
2013. For investor information, visit YGYI.com. For general
information on products and services, please
visit youngevity.com.
Keep up with current activities by following Youngevity
on Twitter and liking the
company Facebook page.
Safe Harbor Statement
This
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995.
In some cases, forward-looking statements can be
identified by terminology such as "may," "should," "potential,"
"continue," "expects," "anticipates," "intends," "plans,"
"believes," "estimates," "encouraged" and similar expressions and
include statements regarding the deployment of our Web Portal
allowing us to accelerate more acquisitions and larger integrations
around the world, effecting an uplisting this year. The
forward-looking statements are based on management's expectations
and assumptions as of the date of this press release and are
subject to a number of risks and uncertainties, many of which are
difficult to predict that could cause actual results to differ
materially from current expectations and assumptions from those set
forth or implied by any forward-looking statements. Important
factors that could cause actual results to differ materially from
current expectations include, among others, our ability to use the
Web Portal to accelerate acquisitions and integrations, to meet the
initial listing standards of the national exchange to which we
apply for a listing, to continue our financial performance and
growth and the other factors described in our filings with the SEC.
The information in this release is provided only as of the date of
this release, and we undertake no obligation to update any
forward-looking statements contained in this release based on new
information, future events, or otherwise, except as required by
law.
Table Follows
-4-
Youngevity International, Inc. and Subsidiaries
|
|
|
Consolidated Statements of Operations
|
|
|
(In
thousands)
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
2015
|
|
|
|
Revenues
|
$162,667
|
$156,597
|
Cost of
revenues
|
64,530
|
63,628
|
Gross
profit
|
98,137
|
92,969
|
|
|
|
Operating
expenses
|
|
|
Distributor
compensation
|
67,148
|
63,276
|
Sales
and marketing
|
10,413
|
8,212
|
General
and administrative
|
18,061
|
16,075
|
Total operating
expenses
|
95,622
|
87,563
|
Operating
income
|
2,515
|
5,406
|
Interest
expense, net
|
(4,474)
|
(4,491)
|
Extinguishment
loss on debt
|
-
|
(1,198)
|
Change
in fair value of warrant derivative liability
|
1,371
|
(39)
|
Total other
expense
|
(3,103)
|
(5,728)
|
Loss before income
taxes
|
(588)
|
(322)
|
Income tax
(benefit) provision
|
(190)
|
1,384
|
Net
loss
|
$(398)
|
$(1,706)
|
|
|
|
Reconciliation of Non-GAAP Measure
|
|
|
Adjusted EBITDA to Net Loss
|
|
|
(In
thousands)
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
2015
|
|
|
|
Net
loss
|
$(398)
|
$(1,706)
|
Add:
|
|
|
Interest,
net
|
4,474
|
4,491
|
Income
taxes
|
(190)
|
1,384
|
Depreciation
|
1,518
|
1,242
|
Amortization
|
2,344
|
2,112
|
EBITDA
|
7,748
|
7,523
|
Add:
|
|
|
Stock
based compensation
|
395
|
455
|
Change
in fair value of warrant derivative liability
|
(1,371)
|
39
|
Extinguishment
loss on debt
|
-
|
1,198
|
Adjusted
EBITDA
|
$6,772
|
$9,215
|
-5-
CONTACT INFORMATION
Contacts:
Youngevity
International
Dave
Briskie
President
and Chief Financial Officer
1 800
982 3189 X6500
Investors:
Chuck
Harbey
PCG
Advisory Group
P: 646
863 7997
Media Contact:
Bobbie
Wasserman for Youngevity
bobbie@wave2alliances.com
P:
866.570.4441
-6-